Building types
Mixed-use condo with commercial units
A condominium holding both residential and commercial units, where the declaration allocates common charges, voting rights and use restrictions between them.
What should you read in a mixed-use condo declaration?
Quick Answer
What is the property interest, legally?
- The declaration creates separate residential and commercial units, sometimes grouped into sections
- Common expenses are allocated by formula, and some expenses are charged to one group alone
- Voting is weighted by common interest, which can give the commercial owner a blocking position
- Use restrictions state what the commercial units may and may not operate
- Separate entrances, elevators and service access are usually allocated as limited common elements
How is a purchase of this type financed?
- The loan is a recorded mortgage, so mortgage recording tax applies
- Lenders cap the share of a building that may be commercial for many loan programs
- A large commercial component can make a residential unit non-warrantable
- Commercial vacancy affects the building’s budget, which the lender reads
Which taxes and building fees apply?
- Mortgage recording tax applies to the recorded mortgage
- NYS transfer tax and NYC RPTT apply, and the RPTT rate depends on how the unit is classified
- A commercial unit is taxed at the non-residential RPTT rate, which is higher at the same price
- The mansion tax applies to residential purchases at the statutory threshold
What does the approval path look like?
- Read the declaration for the common-charge allocation and the voting weights
- Read the use restrictions and confirm what the commercial units currently operate
- Review the budget for expenses charged to the residential section alone
- Confirm the lender is comfortable with the building’s commercial percentage
- Title search, questionnaire, closing, deed recorded in ACRIS
How are common charges split with commercial units?
By the formula in the declaration, which is usually based on common interest but often carves out expenses each group bears alone: residential lobby and elevator on one side, storefront maintenance on the other. The carve-outs are where the money is, and they are not always proportionate.
Can a commercial unit owner block a building decision?
Sometimes. Voting in a condominium is weighted by common interest, and a commercial owner holding a large interest can have enough weight to block amendments, assessments or capital projects. The declaration states the thresholds, and those thresholds decide how much control the residential owners really have.
Does the RPTT rate change for a commercial unit?
Yes. New York City taxes transfers of one to three family homes and residential condominium units at one set of rates and other property at higher rates, with the threshold depending on consideration. Classification of the unit therefore changes the tax at the same purchase price.
What else should you read before closing?
In the glossary
- Transfer tax (RPTT and NYS)Taxes on the conveyance itself, one City and one State. Rates step up at higher prices, and who pays is set by custom and then confirmed by the con...
- CovenantA recorded promise or restriction that runs with the land and binds future owners. Restrictive covenants limit what the property may be used for or...
- EasementA right to use part of another owner's property for a specific purpose. Easements appear as exceptions on a title report and generally survive a sa...
- Mortgage recording taxThe New York tax due when a mortgage is recorded, computed on the new money secured. A CEMA is the standard structure used to reduce the taxable am...
- ACRISNew York City's public index of recorded property documents. Deeds, mortgages, satisfactions, easements and many liens are recorded here, which mak...
- Certificate of Occupancy (C of O)The Department of Buildings document that fixes a building's legal use and occupancy. Lenders and title companies read it to confirm the property c...
Questions this raises
- What gets recorded after a NYC closing?Deed, mortgage, assignments and satisfactions record through ACRIS with the City Register, along with transfer tax returns. What is filed instead o...
- What documents do I sign at closing?Note, mortgage, title affidavit, settlement statement and transfer tax returns for buyers; deed and releases for sellers. What each document actual...
Building types
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- CondopA building split into two condominium units, one commercial and one residential, where the residential unit is owned by a cooperative corporation.
- Condo in a converted buildingA condominium created by converting an existing rental building, where non-purchasing tenants, the reserve fund and building-wide conditions carry ...
- Townhouse and 1-4 family condo declarationA small building divided into condominium units, where outdoor space, party walls, multiple-dwelling registration and the certificate of occupancy ...
The statute itself
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.